A new Financial Guidance & Claims Bill aims to replace three providers of publicly funded financial guidance with a single Financial Guidance Body.
Outlined in the Queen’s Speech as one of the new governmental bills, it intends to improve the financial capability of the UK by delivering a more streamlined service.
A key intended benefit is to provide consumers with greater clarity, given that financial guidance service at present is delivered by multiple bodies, with facilities overlapping. By creating a single body, the Bill aims to give better value for money and improve efficiency.
By transferring regulatory responsibility to the Financial Conduct Authority, it also aims to reduce malpractice such as nuisance calls, as well as ensuring that senior managers are held personally accountable for their business’ actions.
One of the key components of the Bill is to make sure the necessary powers are given to the FCA, including the ability to cap fees that Claims Management Companies charge consumers.
This follows a widespread consumer belief that claims management companies do not tell customers the truth, a proportion of 76% according to a government study.
Funding for the activities of the new body will be through existing pension schemes and financial service industry levies.
Commenting on the implications of the new Bill was Keith Richards. The Chief Executive of the Personal Finance Society stated:
“In light of today’s Queen’s Speech, the Personal Finance Society welcomes the Government’s decision to put the FCA in charge of regulating claims management companies. The FCA has the resources needed to enforce the existing regulation.
“While there are many instances where claims management companies provide valuable support to consumers entitled to compensation, there is a need for tighter enforcement of regulations.
“Better enforcement will bring two significant benefits for customers. First, they will be less likely to be pestered by claims management companies in unethical ways.
“Second, they won’t have to pay premiums that are inflated by unscrupulous firms coaching people into making frivolous or fraudulent claims.
“Cracking down on these firms using a proven regulator is welcome news and we look forward to working with the FCA and other important stakeholders to make a success of the new regime.”
